Pakistan introduces mandatory B2B electronic invoicing

The Federal Board of Revenue (FBR) in Pakistan unveiled alterations and stipulations for the electronic billing system on November 10, 2023. These modifications initially target specific consumer goods. Immediate consumer goods refer to products distributed at retail based on daily consumer demand, excluding durable goods.

In December 2023, the FBR released a notification introducing the requirement for manufacturers, importers, wholesalers, and distributors of immediate consumer goods to generate electronic sales tax invoices using the FBR-approved system.

These selected taxpayers must start issuing electronic invoices from February 1, 2024 to the government's central platform. These taxpayers are identified as "integrated suppliers" by the Pakistani government.

Additionally, registered buyers who receive electronic notifications from taxpayers are mandated to integrate into the new FBR system.

How does electronic invoicing work in Pakistan?

The FBR is set to introduce an electronic invoice validation system (Clearance), requiring all invoicing to be processed through this electronic billing framework. It will generate a real-time verifiable electronic invoice for each taxable supply.

Invoices must be transmitted in a structured JSON format, and the FBR will assign a unique identifier to each document. Subsequently, each taxpayer will be able to send the invoice to the recipient including both the unique identifier and an associated QR code.

The archiving period for these documents is slated to be 6 years.

Pakistan has recently joined the ranks of countries adopting electronic invoicing, aiming to modernize transaction control. The government anticipates that this system will enhance efficiency, reduce costs, and thwart fraud in both local and international business dealings.